The digital services landscape has changed. So have our expectations. Marzena Sokołowska, Financial Services Product Lead at ITMAGINATION explains what this means for banks and how they can become more relevant and useful to their customers by offering value-added services.
In the last ten years, the way that we have consumed goods and services has changed dramatically. The prevalence of the internet and the non-stop advancement of mobile technology (smartphones and tablets) have driven this change. Buying goods online has become the norm rather than the exception, but even buying goods online has changed dramatically in recent years. In the past, we’d sit at a computer with credit or debit card in hand, do our research and then spend a few minutes completing an order. Today, we make the same purchases in just a couple of clicks or taps, from wherever we happen to be, and without needing to remove our payment cards from our wallet or purse. It’s not just online retailers and our habits that have changed. The companies that whose goods and services we buy and make use of are changing too.
In the past, you’d use your bank to set up and make use of different types of accounts, such as savings or current accounts. You’d go to your bank for a loan (maybe for a car) or for a mortgage to fund the purchase of a home. You’d choose your bank based on the interest rates it was offering, your level of satisfaction with the customer service at your local brand and perhaps even the location or proximity of the bank’s branches to your home or place of work.
Banks didn’t stand still while services around them became more digitalized. Many services that previously required a visit to the bank can now be done online. We can manage our overall finances from within a mobile app or on a website. We can create new accounts for specific purposes (e.g. savings), request and extend overdraft facilities and even take out short-term loans. With the right bank, we can do all of this in minutes and without leaving the comfort of our homes. Interest rates are still important but, increasingly, we value the convenience and quality of the digital experience as a key factor when we consider who to bank with.
Digitalizing standard banking services is an important step in keeping banks relevant. But as we observe some of the other changes in the digital services landscape, it’s clear that some of the needs that we as consumers might have previously turned to our bank for are now being addressed by a variety of different service providers. Banks are facing competition. When we shop online, we’re offered a variety of different payment plans, essentially offering us short-term loans. If we travel abroad, we consider using Monzo or Revolut to save us money on bank exchange rates or oft-exploitative currency exchanges. Apple Pay and Apple Cards are creating a new dynamic whereby bank cards have become all but redundant. Most of the new digital services that are creating all the buzz still require you to have a ‘traditional’ bank account but for how long? Is the role of the bank under threat?
In order for banks to remain relevant to their customers, it’s not enough to simply digitalize traditional banking services. Banks need to anticipate customer needs wherever and whenever those needs are felt, and propose the right financial service. Banks are (for now) still a foundational pillar of our lives and we turn to them each day to serve us. However, as services converge and the digital services landscape continues to evolve, banks have a choice:
The first option obviously isn’t very appealing. But what does it mean for a bank to deliver value-added services?
Here are just some of the ways in which banks can become more valuable and relevant to their customers. We’ve divided these examples into two categories:
Many banking applications enable you to pay for your parking without you needing to find spare change or the nearest parking meter. This saves you time and is highly convenient as there’s no more forgetting how much time you have left or rushing back to your car to top up – you can do it all through your phone. OTP Bank in Hungary allows you to pay for parking, public transport, road tolls, event tickets and much more.
Banks typically haven’t been competitive with currency exchange, and dedicated currency exchange counters or kioks can either be difficult to locate or uncompetitive. Apps like Revolut and Monzo are showing travelers around the world that you don’t need to change money before travelling. Meanwhile services like TransferWise are making cross-border money transfers easy and inexpensive.
Insurers need access to the same information that your bank already has and adding any additional information, such as for a car, is quite simple. Today, banks are exploring the possibility of providing insurance products through their digital banking platforms. Already, Revolut offers quick and easy travel insurance through its mobile app.
As governments look to digitalize their services, banks can make the transition even easier by facilitating benefits claims, tax payments, and even the creation of new companies. In Poland, for example, parents can file their claims for non-income-based child support payments (500+) online, through several participating banks.
Most of us enjoy taking advantage of special offers and promotions. For some, it’s a nice way to save money or enjoy a treat as part of a planned purchase. For others, it’s a motivating factor in making a purchase. But to take advantage of everything, we’d be walking around with a wallet full of loyalty cards and an envelope full of coupons. In reality, your bank knows where you shop (both the brands and the locations in which you typically shop) so wouldn’t it make sense to learn about promotions that are relevant to you and your spending habits in your bank’s mobile app? And why do you need to use both a bank card and a loyalty card to collect points at your favorite retailers? Why not do it all through your bank card or app? In short, why should you remember about promotions and carrying the right cards and coupons when your bank could do it for you?
An example of how this could work is Starling Bank’s hookup with Yoyo.
Sometimes we want or need to buy an item or service but are unsure if we can really afford it. Imagine if you could scan a barcode on an item in a shop and have your bank recommend the best way for you to pay (e.g. instalments or one-off payment) or even using your historical spending data (such as bills) to display that you might be leaving yourself short to pay some upcoming bills. Most banks have the data to be able to do this already – it’s just about integrating the right technology to make this a mainstream reality. Check out our post on how ‘buy now, pay later’ could be the key to being relevant to millennial consumers.
Most of us have subscriptions to a variety of different streaming services, such as Netflix, Spotify, and Apple Music. It’s easy enough to sign up but we have a habit of forgetting passwords or forgetting to evaluate whether we’re really getting value for money. Sometimes we don’t make use of the services but continue to pay just because it’s too much hassle to unsubscribe. Imagine if you could manage all your subscriptions from within your mobile banking app. It’d certainly save time and it would probably save most of us money as well.
Your bank account features details of who pays you for your services and who you pay. As such, it’s natural to think that you could use your banking platform to issue invoices or raise purchase orders. Based on historical data of transactions, as well as issued invoices and received, your bank could help you to forecast cashflow, analyze costs and much more right from within your online platform or mobile app. Banks like PKO Bank Polski, Alior Bank, Idea Bank, ING and mBank are already doing this in Poland.
Most of us pay our bills with bank transfers or standing orders. Cell phone, cable, energy … you name it, if you’re paying your bills then your bank knows about it. But knowing is one thing, using that knowledge to save you money is something else. Monzo – the undoubted leader in value-added services – analyzes your spending on various different utility services and, based on its knowledge of you and your demographic, is able to compare your outgoings to similar-demographic profiles in its client database (anonymously, of course) and identify whether there are opportunities for you to save money by switching suppliers. And it’s not just utilities – imagine being able to switch mortgage provider to get the best deal on the market. And imagine being able to do it all without a visit or phone call to your existing operators, and no paperwork. That’s real value being added to customers lives.
American Express gained a great deal of publicity several years back with the introduction of its exclusive American Express Black card, which was ‘invite only’ and featured a concierge service. Technology has come a long way since then, and now American Express has launched AskAmex, a personal mobile assistant that will help American Express cardholders plan their trips. AskAmex can help with everything from booking flights, through to hotel accommodation, train tickets and even dinner reservations.
ITMAGINATION has already developed the technology to manage entire trips with a single app. Check out a demo of the My Travel app from the 2019 Finovate event in London.
Scandinavians are known for being a step or two ahead when it comes to the innovative application of technology services. Danske Bank, DNB and Nordea are using their online and mobile banking platforms to provide support in dealing with government offices, career development and even selling real estate. With a bank like this, who else do you need?
The last decade has shown us just what is possible with mobile technology. Most of us have downloaded dozens of apps and have enjoyed new experiences that we’ll never want to part with. At the same time, many of us are experiencing app overload. Most of us have dozens of apps on our phone but, according to data from 2017, the vast majority (96%) of time is spent on just a user’s ten favorite apps. Banking apps are among the few that could viably replace several others simply by integrating more value-added services. What if banks could position themselves as the interface to a range of useful everyday services. Here’s how:
The world doesn’t need more impersonal, spammy offers and people probably don’t need more apps for their smartphones. But banks have a unique opportunity (not least in Europe, where the implementation of PSD2 in Europe opens up a wealth of possibilities). By building and working with partners, and integrating useful, contextually relevant services into their service offerings, banks can transform their relationship with customers beyond the standard transactional nature of transfers and balance checking, and become a truly indispensable interface with a host of relevant and useful value-added services.
ITMAGINATION has a wealth of experience in supporting banks, fintechs and retailers, and so is optimally positioned to help banks integrate new services into their online and mobile banking platforms. We have developed extensive expertise and insight on how banks can make use of AI, big data and behavioral analytics to provide micro-personalized services to their customers.
If you want to add value to your customers’ lives and be a core part of their digital experiences, talk to ITMAGINATION.
Learn it. Know it. Done.
Author: Marzena Sokołowska
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